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292 SUPREME COURT REPORTS ANNOTATED

Pang-et vs. Manacnes-Dao-as

*
G.R. No. 167261. March 2, 2007.

ROSARIA LUPITAN PANG-ET, petitioner, vs.


CATHERINE MANACNES-DAO-AS, Heir of LEONCIO
MANACNES and FLORENTINA MANACNES,
respondent.

Katarungang Pambarangay Law; The object of the


Katarungang Pambarangay Law is the amicable settlement of
disputes through conciliation proceedings voluntarily and freely
entered into by the parties; The disputing parties are not compelled
to settle their controversy during the barangay proceedings before
the Lupon or the Pangkat, as they are free to instead find recourse
in the courts.—At this juncture, it must be stressed that the object
of the Katarungang Pambarangay Law is the amicable settlement
of disputes through conciliation proceedings voluntarily and freely
entered into by the parties. Through this mechanism, the parties
are encouraged to settle their disputes without enduring the
rigors of court litigation. Nonetheless, the disputing parties are
not compelled to settle their controversy during the barangay
proceedings before the Lupon or the Pangkat, as they are free to
instead find recourse in the courts in the event that no true
compromise is reached.

_______________

* THIRD DIVISION.

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Pang-et vs. Manacnes-Dao-as

Same; The key in achieving the objectives of an effective


amicable settlement under the Katarungang Pambarangay Law is
the free and voluntary agreement of the parties to submit the
dispute for adjudication either by the Lupon or the Pangkat, whose
award or decision shall be binding upon them with the force and
effect of a final judgment of a court.—The key in achieving the
objectives of an effective amicable settlement under the
Katarungang Pambarangay Law is the free and voluntary
agreement of the parties to submit the dispute for adjudication
either by the Lupon or the Pangkat, whose award or decision shall
be binding upon them with the force and effect of a final judgment
of a court. Absent this voluntary submission by the parties to
submit their dispute to arbitration under the Katarungang
Pambarangay Law, there cannot be a binding settlement arrived
at effectively resolving the case. Hence, we fail to see why the
MCTC further remanded the case to the Lupon ng
Tagapamayapa and insisted that the arbitration proceedings
continue, despite the clear showing that the spouses Manacnes
refused to submit the controversy for arbitration. It would seem
from the Order of the MCTC, which again remanded the case for
arbitration to the Lupon ng Tagapamayapa, that it is compulsory
on the part of the parties to submit the case for arbitration until
an arbitration award is rendered by the Lupon. This, to our
minds, is contrary to the very nature of the proceedings under the
Katarungang Pambarangay Law which espouses the principle of
voluntary acquiescence of the disputing parties to amicable
settlement.

Same; What is compulsory under the Katarungang


Pambarangay Law is that there be a confrontation between the
parties before the Lupon Chairman or the Pangkat and that a
certification be issued that no conciliation or settlement has been
reached, as attested to by the Lupon or Pangkat Chairman, before
a case falling within the authority of the Lupon may be instituted
in court or any other government office for adjudication.—What is
compulsory under the Katarungang Pambarangay Law is that
there be a confrontation between the parties before the Lupon
Chairman or the Pangkat and that a certification be issued that
no conciliation or settlement has been reached, as attested to by
the Lupon or Pangkat Chairman, before a case falling within the
authority of the Lupon may be instituted in court or any other
government office for adjudication. In other words, the only
necessary pre-condition before any case falling within the
authority of the Lupon or the Pangkat may be filed before

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294 SUPREME COURT REPORTS ANNOTATED

Pang-et vs. Manacnes-Dao-as

a court is that there has been personal confrontation between the


parties but despite earnest efforts to conciliate, there was a
failure to amicably settle the dispute. It should be emphasized
that while the spouses Manacnes appeared before the Lupon
during the initial hearing for the conciliation proceedings, they
refused to sign the Agreement for Arbitration form, which would
have signified their consent to submit the case for arbitration.
Therefore, upon certification by the Lupon ng
Tagapamayapa that the confrontation before the Pangkat
failed because the spouses Manacnes refused to submit the
case for arbitration and insisted that the case should go to
court, the MCTC should have continued with the
proceedings in the case for recovery of possession which it
suspended in order to give way for the possible amicable
resolution of the case through arbitration before the
Lupon ng Tagapamayapa.

Same; As reflected in Section 413 of the Revised Katarungang


Pambarangay Law, in order that a party may be bound by an
arbitration award, said party must have agreed in writing that
they shall abide by the arbitration award of the Lupon or the
Pangkat.—The MCTC should not have persisted in ordering the
Lupon ng Tagapamayapa to render an arbitration award upon
the refusal of the spouses Manacnes to submit the case for
arbitration since such arbitration award will not bind the spouses.
As reflected in Section 413 of the Revised Katarungang
Pambarangay Law, in order that a party may be bound by an
arbitration award, said party must have agreed in writing that
they shall abide by the arbitration award of the Lupon or the
Pangkat. Like in any other contract, parties who have not signed
an agreement to arbitrate will not be bound by said agreement
since it is axiomatic that a contract cannot be binding upon and
cannot be enforced against one who is not a party to it. In view of
the fact that upon verification by the Pangkat Chairman, in order
to settle the issue of whether or not they intend to submit the
matter for arbitration, the spouses Manacnes refused to affix
their signature or thumb mark on the Agreement for Arbitration
Form, the Manacnes spouses cannot be bound by the Agreement
for Arbitration and the ensuing arbitration award since they
never became privy to any agreement submitting the case for
arbitration by the Pangkat.

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Pang-et vs. Manacnes-Dao-as

PETITION for review on certiorari of a decision of the


Court of Appeals.
The facts are stated in the opinion of the Court.
     Ma. Inglay Capuyan-Fokno for petitioner.
     Johnny Ekid for respondent.

CHICO-NAZARIO, J.:
Before Us is a Petition for Review on Certiorari under Rule1
45 of the Rules of Civil Procedure, assailing the Decision of
the Court of Appeals in CA-G.R. SP No. 78019, dated 9
February 2 2005, which reversed and set aside the
Judgment of the Regional Trial Court (RTC), Branch 36,3
Bontoc, Mountain Province, and reinstated the Resolution
of the Municipal Circuit Trial Court (MCTC) of Besao-
Sagada, Mountain Province dismissing herein petitioner’s
action for Enforcement of Arbitration Award and Damages. 4
The instant petition draws its origin from an Action for
recovery of possession of real property situated in Sitio
Abatan, Barrio Dagdag, Sagada filed by herein petitioner
before the MCTC of Besao-Sagada, Mountain Province on 9
November 1994, against the spouses Leoncio and
Florentina Manacnes, the predecessors-in-interest of
herein respondent.
On 23 February 1995, during the course of the pre-trial,
the parties, through their respective counsels, agreed to
refer the matter to the Barangay Lupon (Lupon) of Dagdag,
Sagada for arbitration in accordance with the provisions of
the Kata-

_______________

1 Penned by Associate Justice Rosmari D. Carandang with Associate


Justices Remedios Salazar-Fernando and Monina ArevaloZenarosa,
concurring; Rollo, pp. 29–36.
2 Penned by Judge Artemio B. Marrero, dated 2 June 2003 in Civil Case
No. 1090; id., at pp. 37–40.
3 Penned by Presiding Judge James P. Kibitin, dated 20 August 2002 in
Civil Case No. 118; Records, pp. 52–55.
4 Docketed as Civil Case No. 83.

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296 SUPREME COURT REPORTS ANNOTATED


Pang-et vs. Manacnes-Dao-as

5
rungang Pambarangay Law. Consequently, the
proceedings before the MCTC were suspended, 6
and the
case was remanded to the Lupon for resolution.
Thereafter, the Lupon issued a Certification to File
Action on 26 February 1995 due to the refusal of the
Manacnes spouses to enter into an Agreement for
Arbitration and their insistence that the case should go to
court. On 8 March 1995, the Certification, as well as the
records of the case, were forwarded to the MCTC.
An Order was issued by the MCTC on 7 April 1995, once
more remanding the matter for conciliation by the Lupon
and ordering the Lupon to render an Arbitration Award
thereon. According to the MCTC, based on the records of
the case, an Agreement for Arbitration was executed by the
parties concerned; however, the Lupon failed to issue an
Arbitration Award as provided under the Katarungang
Pambarangay Law, so that, the case must be returned to
the Lupon until an Arbitration Award is rendered.
In compliance with the MCTC Order, the Lupon
rendered an Arbitration Award on 10 May 1995 ordering
herein petitioner to retrieve the land upon payment to the
spouses Manacnes of the amount of P8,000.00 for the7
improvements on the land. Aggrieved, Leoncio’s widow,
Florentina Manacnes, repudiated the Arbitration Award
but her repudiation was rejected by the Lupon. Thereafter,
the MCTC was furnished with copies of the Arbitration
Award.
On 1 June 1995, herein petitioner filed with the Lupon a
Motion for Execution of the Arbitration Award. On the
other hand, Florentina Manacnes filed a Motion with the
MCTC for the resumption of the proceedings in the original
case for

_______________

5 The Revised Katarungang Pambarangay Law, Sections 399–422,


Chapter 7; Title One, Book III, Republic Act No. 7160, otherwise known as
the Local Government Code of 1991.
6 Docketed as Barangay Case No. 7.
7 Leoncio Manacnes died on 10 May 1995; Records, p. 39.

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Pang-et vs. Manacnes-Dao-as

recovery of possession and praying that the MCTC consider


her repudiation of the Arbitration Award issued by the
Lupon.
Subsequently, the MCTC heard the Motion of Florentina
Manacnes notwithstanding the latter’s failure to appear
before the court despite notice. The MCTC denied
Florentina Manacnes’ Motion to repudiate the Arbitration
Award elucidating that since the movant failed to take any
action within the 10-day reglementary period provided for
under the Katarungang Pambarangay Law, the arbitration
award has become final and executory. Furthermore, upon
motion of herein petitioner Pang-et, the MCTC issued an
Order remanding the records of the case to the Lupon for
the execution of the Arbitration Award. On 31 August
1995, the then incumbent Punong Barangay of Dagdag
issued a Notice of Execution of the Award.
Said Notice of Execution was never implemented. Thus,
on 16 October 2001, herein petitioner Pang-et filed with the
MCTC an action for enforcement of the Arbitration Award
which was sought 8 to be dismissed by the heir of the
Manacnes spouses. The heir of the Manacnes spouses
argues that the Agreement for Arbitration and the
Arbitration Award are void, the Agreement for Arbitration
not having been personally signed by the spouses
Manacnes, and the Arbitration Award having been written
in English—a language not understood by the parties.
In its Resolution dated 20 August 2002, the MCTC
dismissed the Petition for Enforcement of Arbitration
Award in this wise:

“x x x Are defendants estopped from questioning the proceedings


before the Lupon Tagapamayapa concerned?

_______________

8 Florentina Manacnes also died sometime after the issuance of the


Notice of Execution; id., at p. 2.

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298 SUPREME COURT REPORTS ANNOTATED


Pang-et vs. Manacnes-Dao-as

The defendants having put in issue the validity of the proceedings


before the lupon concerned and the products thereof, they are not
estopped. It is a hornbook rule that a null and void act could
always be questioned at any time as the action or defense based
upon it is imprescriptible.
The second issue: Is the agreement to Arbitrate null and void?
Let us peruse the pertinent law dealing on this matter which is
Section 413 of the Local Government Code of 1991 (RA 7160), to
wit:

“Section 413—(a) The parties may, at any stage of the proceedings, agree
in writing that they shall abide by the arbitration award of the lupon
chairman or the pangkat. x x x” The foregoing should be taken together
with Section 415 of the same code which provides:
“Section 415. Appearance of parties in person.—In all katarungang
pambarangay proceedings, the parties must appear in person without the
assistance of counsel or representative, except for minors and
incompetents who may be assisted by their next-of-kin who are not
lawyers.”

It is very clear from the foregoing that personal appearance of


the parties in conciliation proceedings before a Lupon
Tagapamayapa is mandatory. Likewise, the execution of the
agreement to arbitrate must be done personally by the parties
themselves so that they themselves are mandated to sign the
agreement.
Unfortunately, in this case, it was not respondents-spouses
[Manacnis] who signed the agreement to arbitrate as plaintiff
herself admitted but another person. Thus, it is very clear that
the mandatory provisos of Section 413 and 415 of RA 7160 are
violated. Granting arguendo that it was Catherine who signed the
agreement per instruction of her parents, will it cure the
violation? The answer must still be in the negative. As provided
for by the cited provisos of RA 7160, if ever a party is entitled to
an assistance, it shall be done only when the party concerned is a
minor or incompetent. Here, there is no showing that the spouses
[Manacnis] were incompetent. Perhaps very old but not
incompetent. Likewise, what the law provides is assistance, not
signing of agreements or settlements.
Just suppose the spouses [Manacnis] executed a special power
of attorney in favor of their daughter Catherine to attend the
proceedings and to sign the agreement to arbitrate? The more
that it is proscribed by the Katarungang Pambarangay Law
specifically Sec

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Pang-et vs. Manacnes-Dao-as

tion 415 of RA 7160 which mandates the personal appearance of


the parties before the lupon and likewise prohibits the
appearance of representatives.
In view of the foregoing, it could now be safely concluded that
the questioned agreement to arbitrate is inefficacious for being
violative of the mandatory provisions of RA 7160 particularly
sections 413 and 415 thereof as it was not the respondents-
spouses [Manacnis] who signed it.
The third issue: Is the Arbitration Award now sought to be
enforced effective? Much to be desired, the natural flow of events
must follow as a consequence. Considering that the agreement to
arbitrate is inefficacious as earlier declared, it follows that the
arbitration award which emanated from it is also inefficacious.
Further, the Arbitration Award by itself, granting arguendo that
the agreement to arbitrate is valid, will readily show that it does
not also conform with the mandate of the Katarungang
Pambarangay Law particularly Section 411 thereto which
provides:

“Sec. 411. Form of Settlement.—All amicable settlements shall be in


writing in a language or dialect known to the parties x x x. When the
parties to the dispute do not use the same language or dialect, the
settlement shall be written in the language known to them.”

Likewise, the implementing rules thereof, particularly Section


13 provides:
“Sec. 13. Form of Settlement and Award.—All settlements, whether by
mediation, conciliation or arbitration, shall be in writing, in a language
or dialect known to the parties. x x x”

It is of no dispute that the parties concerned belong to and are


natives of the scenic and serene community of Sagada, Mt.
Province who speak the Kankanaey language. Thus, the
Arbitration Award should have been written in the Kankanaey
language. However, as shown by the Arbitration Award, it is
written in English language which the parties do not speak and
therefore a further violation of the Katarungang Pambarangay
Law.

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Pang-et vs. Manacnes-Dao-as

IN THE LIGHT of all the foregoing 9


considerations, the
aboveentitled case is hereby dismissed.”

Petitioner Pang-et’s Motion for Reconsideration having


been denied, she filed an Appeal before the RTC which
reversed and set aside the Resolution of the MCTC and
remanded the case to the MCTC for further proceedings.
According to the RTC:

“As it appears on its face, the Agreement for Arbitration in point


found on page 51 of the expediente, dated Feb. 6, 1995, and
attested by the Pangkat Chairman of the Office of the Barangay
Lupon of Dagdag, Sagada was signed by the
respondents/defendants spouses Manacnis. The representative of
the Appellee in the instant case assails such Agreement claiming
that the signatures of her aforesaid predecessors-in-interest
therein were not personally affixed by the latter or are falsified-
which in effect is an attack on the validity of the document on the
ground that the consent of the defendants spouses Manacnis is
vitiated by fraud. Indulging the Appellee Heirs of Manacnis its
contention that such indeed is the truth of the matter, the fact
still remains as borne out by the circumstances, that neither did
said original defendants nor did any of such heirs effectively
repudiate the Agreement in question in accordance with the
procedure outlined by the law, within five (5) days from Feb. 6,
1995, on the ground as above-stated (Secs. 413 (a), 418, RA 7160;
Secs. 7, 13, KP Law; Sec. 12, Rule IV, KP Rules). As mandated,
such failure is deemed a waiver on the part of the defendants
spouses Manacnis to challenge the Agreement for Arbitration on
the ground that their consent thereto is obtained and vitiated by
fraud (Sec. 12, Par. 3, KP Rules). Corollarily, the Appellee Heirs
being privy to the now deceased original defendants should have
not been permitted by the court a quo under the equitable
principle of estoppel, to raise the matter in issue for the first time
in the present case (Lopez vs. Ochoa, 103 Phil. 94).
The Arbitration Award relative to Civil Case 83 (B.C. No. 07)
dated May 10, 1995, written in English, attested by the Punong
Barangay of Dagdag and found on page 4 of the record is likewise
assailed by the Appellee as void on the ground that the English

_______________

9 MCTC Resolution, pp. 2–4, Records, pp. 53–55.

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language is not known by the defendants spouses Manacnis who


are Igorots. Said Appellee contends that the document should
have been written in Kankana-ey, the dialect known to the party
(Sec. 413 (b), RA 7160; Sec. 7, Par. 2, KP law, Sec. 11, KP Rules).
On this score, the court a quo presumptuously concluded on the
basis of the selfserving mere say-so of the representative of the
Appellee that her predecessors did not speak or understand
English. As a matter of judicial notice, American Episcopalian
Missionaries had been in Sagada, Mountain Province as early as
1902 and continuously stayed in the place by turns, co-mingling
with the indigenous people thereat, instructing and educating
them, and converting most to the Christian faith, among other
things, until the former left about twenty years ago. By constant
association with the white folks, the natives too old to go to school
somehow learned the King’s English by ear and can effectively
speak and communicate in that language. Any which way, even
granting arguendo that the defendants spouses Manacnis were
the exceptions and indeed totally ignorant of English, no petition
to nullify the Arbitration award in issue on such ground as
advanced was filed by the party or any of the Appellee Heirs with
the MCTC of Besao-Sagada, within ten (10) days from May 10,
1995, the date of the document. Thus, upon the expiration thereof,
the Arbitration Award acquired the force and effect of a final
judgment of a court (Sec. 416, RA 7160; Sec. 11, KP Law; Sec. 13,
KP Rules); conclusive upon the original defendants in Civil Case
83 (B.C. No. 07) and the Appellee Heirs herein privy to said
defendants.
In the light thereof, the collateral attack of the Appellee on the
Agreement for Arbitration and Arbitration Award re Civil Case 83
(B.C. No. 07) should not have in the first place been given due
course by the court a quo. In which case, it would not have in the
logical flow of things declared both documents “inefficacious;”
without which pronouncements, said court would not have
dismissed the case at bar.
Wherefore, Judgment is hereby rendered Reversing and
Setting Aside the Resolution appealed from, and ordering the
record of the case subject
10
thereof remanded to the court of origin
for further proceedings.”

_______________

10 RTC Judgment, pp. 3–4; Rollo, pp. 39–40.

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Pang-et vs. Manacnes-Dao-as

Aggrieved by the reversal of the RTC, herein respondent


filed a petition before the Court of Appeals seeking to set
aside the RTC Judgment. On 9 February 2005, the
appellate court rendered the herein assailed Decision, to
wit:

“After thoroughly reviewing through the record, We find nothing


that would show that the spouses Manacnes were ever amenable
to any compromise with respondent Pang-et. Thus, We are at a
loss as to the basis of the Arbitration Award sought to be enforced
by respondent Pang-et’s subsequent action before the MCTC.
There is no dispute that the proceeding in Civil Case No. 83
was suspended and the same remanded to the Lupon on account
of the Agreement to Arbitrate which was allegedly not signed by
the parties but agreed upon by their respective counsels during
the pretrial conference. In the meeting before the Lupon, it would
seem that the agreement to arbitrate was not signed by the
spouses Manacnes. More importantly, when the pangkat
chairman asked the spouses Manacnes to sign or affix their
thumbmarks in the agreement, they refused and insisted that the
case should instead go to court. Thus, the Lupon had no other
recourse but to issue a certificate to file action. Unfortunately, the
case was again remanded to the Lupon to “render an arbitration
award.” This time, the Lupon heard the voice tape of the late
Beket Padonay affirming respondent Pang-et’s right to the
disputed property. While Pang-et offered to pay P8,000.00 for the
improvements made by the spouses Manacnes, the latter refused
to accept the same and insisted on their right to the subject
property. Despite this, the Lupon on May 10, 1995 issued an
Arbitration award which favored respondent Pang-et.
From the time the case was first referred to the Lupon to the
time the same was again remanded to it, the Spouses Manacnes
remained firm in not entering into any compromise with
respondent Pang-et. This was made clear in both the minutes of
the Arbitration Hearing on 26 February 1995 and on 9 April 1995.
With the foregoing, We find it evident that the spouses Manacnes
never intended to submit the case for arbitration.
Moreover, the award itself is riddled with flaws. First of all
there is no showing that the Pangkat ng Tagapagkasundo was
duly constituted in accordance with Rule V of the Katarungan
Pambarangay Rules. And after constituting of the Pangkat, Rule
VI, thereof the Punong Barangay and the Pangkat must proceed
to hear

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the case. However, according to the minutes of the hearing before


the lupon on 9 April 1995, the pangkat Chairman and another
pangkat member were absent for the hearing.
Finally, Section 13 of the same Rule requires that the Punong
Barangay or the Pangkat Chairman should attest that parties
freely and voluntarily agreed to the settlement arrived at. But
how can this be possible when the minutes of the two hearings
show that the spouses Manacnes neither freely nor voluntarily
agreed to anything.
While RA 7160 and the Katarungan Pambarangay rules
provide for a period to repudiate the Arbitration Award, the same
is neither applicable nor necessary since the Agreement to
Arbitrate or the Arbitration Award were never freely nor
voluntarily entered into by one of the parties to the dispute. In
short, there is no agreement validly concluded that needs to be
repudiated.
With all the foregoing, estoppel may not be applied against
petitioners for an action or defense against a null and void act
does not prescribe. With this, We cannot but agree with the
MCTC that the very agreement to arbitrate is null and void.
Similarly, the arbitration award which was but the off shoot of
the agreement is also void.
WHEREFORE, the RTC judgment of 2 June 2003 is
REVERSED and SET ASIDE, the MCTC Resolution
DISMISSING the Civil Case No.11 118 for enforcement of
Arbitration Award is REINSTATED.”

Vehemently disagreeing with the Decision of the Court of


Appeals, petitioner Pang-et filed the instant petition.
Petitioner maintains that the appellate court overlooked
material facts that resulted in reversible errors in the
assailed Decision. According to petitioner, the Court of
Appeals overlooked the fact that the original parties, as
represented by their respective counsels in Civil Case No.
83, mutually agreed to submit the case for arbitration by
the Lupon ng Tagapamayapa of Barangay Dagdag.
Petitioner insists that the parties must be bound by the
initial agreement by their counsels during pre-trial to an
amicable settlement as any representation made by the
lawyers are deemed made with the confor-

_______________

11 CA Decision, pp. 5–8; id., at pp. 33–36.

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Pang-et vs. Manacnes-Dao-as

mity of their clients. Furthermore, petitioner maintains


that if indeed the spouses Manacnes did not want to enter
into an amicable settlement, then they should have raised
their opposition at the first instance, which was at the pre-
trial on Civil Case No. 83 when the MCTC ordered that the
case be remanded to the Lupon ng Tagapamayapa for
arbitration.
We do not agree with the petitioner.
First and foremost, in order to resolve the case before us,
it is pivotal to stress that, during the initial hearing before
the Lupon ng Tagapamayapa, the spouses Manacnes
declined to sign the Agreement for Arbitration and were
adamant that the proceedings before the MCTC in Civil 12
Case No. 83 must continue. As reflected in the Minutes of
the Arbitration Hearing held on 26 February 1995, the
legality of the signature of Catherine Manacnes, daughter
of the Manacnes spouses, who signed the Agreement for
Arbitration on behalf of her parents, was assailed on the
ground that it should be the spouses Manacnes themselves
who should have signed such agreement. To resolve the
issue, the Pangkat Chairman then asked the spouses
Manacnes that if they wanted the arbitration proceedings
to continue, they must signify their intention in the
Agreement for Arbitration form. However, as stated earlier,
the Manacnes spouses did not want to sign such agreement
and instead insisted that the case go to court.
Consequently, the Lupon issued a Certification to File
Action on 26 February 1995 due to the refusal of the
Manacnes spouses. Indicated in said Certification are the
following: 1) that there was personal confrontation between
the parties before the Punong Barangay but conciliation
failed and 2) that the Pangkat ng Tagapagkasundo
was constituted but the personal confrontation
before the Pangkat failed likewise because
respondents do not want to submit this case for
arbitration and insist that said

_______________
12 CA Rollo, p. 66.

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Pang-et vs. Manacnes-Dao-as

13
case will go to court. Nevertheless, upon receipt of said
certification and the records of the case, the MCTC ordered
that the case be remanded to the Lupon ng Tagapamayapa
and for the latter to render an arbitration award,
explaining that:

“Going over the documents submitted to the court by the office of


the Lupon Tagapamayapa of Dagdag, Sagada, Mountain
Province, the court observed that an “Agreement for Arbitration”
was executed by the parties anent the above-entitled case.
However, said Lupon did not make any arbitration award as
mandated by the Katarungang Pambarangay Law but instead
made a finding that the case may now be brought to the court.
This is14violative of the KP Law, which cannot be sanctioned by the
court.”

At this juncture, it must be stressed that the object of the


Katarungang Pambarangay Law is the amicable
settlement of disputes through conciliation proceedings 15
voluntarily and freely entered into by the parties.
Through this mechanism, the parties are encouraged to
settle their disputes without enduring the rigors of court
litigation. Nonetheless, the disputing parties are not
compelled to settle their controversy during the barangay
proceedings before the Lupon or the Pangkat,
16
as they are
free to instead find recourse in the courts in the event that
no true compromise is reached.

_______________

13 Id., at p. 67.
14 Id., at p. 68.
15 Preamble, Presidential Decree No. 1293, otherwise known as the
Katarungang Pambarangay Law.
16 Revised Katarungang Pambarangay Law, Section 412 (a)—Pre-
condition to filing of Complaint in Court—No complaint, petition, action or
proceeding involving any matter within the authority of the lupon shall be
filled or instituted directly in court or any other government office for
adjudication unless there has been a confrontation between the parties
before the lupon chairman or the pangkat, and that no conciliation or
settlement has been reached as certified by the lupon secretary or pangkat
secretary as attested to by the

306
306 SUPREME COURT REPORTS ANNOTATED
Pang-et vs. Manacnes-Dao-as

The key in achieving the objectives of an effective amicable


settlement under the Katarungang Pambarangay Law is
the free and voluntary agreement of the parties to submit
the dispute for adjudication either by the Lupon or the
Pangkat, whose award or decision shall be binding upon
them 17with the force and effect of a final judgment of a
court. Absent this voluntary submission by the parties to
submit their dispute to arbitration under the Katarungang
Pambarangay Law, there cannot be a binding settlement
arrived at effectively resolving the case. Hence, we fail to
see why the MCTC further remanded the case to the Lupon
ng Tagapamayapa and insisted that the arbitration
proceedings continue, despite the clear showing that the
spouses Manacnes refused to submit the controversy for
arbitration.
It would seem from the Order of the MCTC, which again
remanded the case for arbitration to the Lupon ng
Tagapamayapa, that it is compulsory on the part of the
parties to submit the case for arbitration until an
arbitration award is rendered by the Lupon. This, to our
minds, is contrary to the very nature of the proceedings
under the Katarungang Pambarangay Law which espouses
the principle of voluntary acquiescence of the disputing
parties to amicable settlement.
What is compulsory under the Katarungang
Pambarangay Law is that there be a confrontation between
the parties before the Lupon Chairman or the Pangkat and
that a certification be issued that no conciliation or
settlement has been reached, as attested to by the Lupon or
Pangkat Chairman, before a case falling within the
authority of the Lupon may be instituted 18
in court or any
other government office for adjudication. In other words,
the only necessary pre-condition before any case falling
within the authority of the Lupon or the Pangkat may be
filed before a court is that there has been

_______________

lupon or pangkat chairman or unless the settlement has been


repudiated by the parties thereto.
17 Section 413, Revised Katarungang Pambarangay Law.
18 CA Rollo, p. 68.

307

VOL. 517, MARCH 2, 2007 307


Pang-et vs. Manacnes-Dao-as
personal confrontation between the parties but despite
earnest efforts to conciliate, there was a failure to amicably
settle the dispute. It should be emphasized that while the
spouses Manacnes appeared before the Lupon during the
initial hearing for the conciliation proceedings, they
refused to sign the Agreement for Arbitration form, which
would have signified their consent to submit the case for
arbitration. Therefore, upon certification by the
Lupon ng Tagapamayapa that the confrontation
before the Pangkat failed because the spouses
Manacnes refused to submit the case for arbitration
and insisted that the case should go to court, the
MCTC should have continued with the proceedings
in the case for recovery of possession which it
suspended in order to give way for the possible
amicable resolution of the case through arbitration
before the Lupon ng Tagapamayapa.
Petitioner’s assertion that the parties must be bound by
their respective counsels’ agreement to submit the case for
arbitration and thereafter enter into an amicable
settlement is imprecise. What was agreed to by the parties’
respective counsels was the remand of the case to the
Lupon ng Tagapamayapa for conciliation proceedings and
not the actual amicable settlement of the case. As stated
earlier, the parties may only be compelled to appear before
the Lupon ng Tagapamayapa for the necessary
confrontation, but not to enter into any amicable
settlement, or in the case at bar, to sign the Agreement for
Arbitration. Thus, when the Manacnes spouses personally
appeared during the initial hearing before the Lupon ng
Tagapamayapa, they had already complied with the
agreement during the pre-trial to submit the case for
conciliation proceedings. Their presence during said
hearing is already their acquiescence to the order of the
MCTC remanding the case to the Lupon for conciliation
proceedings, as there has been an actual confrontation
between the parties despite the fact that no amicable
settlement was reached due to the spouses Manacnes’
refusal to sign the Agreement for Arbitration.

308

308 SUPREME COURT REPORTS ANNOTATED


Pang-et vs. Manacnes-Dao-as

Furthermore, the MCTC should not have persisted in


ordering the Lupon ng Tagapamayapa to render an
arbitration award upon the refusal of the spouses
Manacnes to submit the case for arbitration since such
arbitration award will not bind the spouses. As reflected in
Section 413 of the Revised Katarungang Pambarangay
Law, in order that a party may be bound by an arbitration
award, said party must have agreed in writing that they
shall abide by the arbitration award of the Lupon or the
Pangkat. Like in any other contract, parties who have not
signed an agreement to arbitrate will not be bound by said
agreement since it is axiomatic that a contract cannot be
binding upon and cannot be enforced against one who is not
a party to it.19 In view of the fact that upon verification by
the Pangkat Chairman, in order to settle the issue of
whether or not they intend to submit the matter for
arbitration, the spouses Manacnes refused to affix their
signature or thumb mark on the Agreement for Arbitration
Form, the Manacnes spouses cannot be bound by the
Agreement for Arbitration and the ensuing arbitration
award since they never became privy to any agreement
submitting the case for arbitration by the Pangkat.
WHEREFORE, premises considered, the instant petition
is hereby DENIED. The Decision of the Court of Appeals in
CAG.R. SP No. 78019 is hereby AFFIRMED. The
Municipal Circuit Trial Court of Besao-Sagada, Mountain
Province, is hereby ORDERED to proceed with the trial of
Civil Case No. 83 for Recovery of Possession of Real
Property, and the immediate resolution of the same with
deliberate dispatch. No costs.
SO ORDERED.

          Ynares-Santiago (Chairperson), Austria-Martinez


and Nachura, JJ., concur.

_______________

19 Ramos v. Court of Appeals, G.R. No. 132196, 9 December 2005, 477


SCRA 85, 99.

309

VOL. 517, MARCH 2, 2007 309


Portuguez vs. GSIS Family Bank (Comsavings Bank)

     Callejo, Sr., J., On Leave.

Petition denied, judgment affirmed.

Notes.—Section 415 of the LGC clearly requires the


personal appearance of the parties in katarungang
pambarangay conciliation proceedings, unassisted by
counsel or representative. There can be no quibbling that
laymen of good will can easily agree to conciliate and settle
their dispute between themselves without what sometimes
is the unsettling assistance of lawyers whose presence
could sometimes obfuscate and confuse issues. (Magno vs.
Velasco-Jacoba, 475 SCRA 584 [2005])
The Settlement Agreement of parties approved by the
Lupon ng Tagapamayapa may be enforced by the Lupon,
through the punong barangay within six months, and if the
settlement is not enforced after the lapse of said period, it
may be enforced by an action in the proper city or
municipal court. (Berba vs. Pablo, 474 SCRA 686 [2005])

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